On 26 January 2021, the Government issued a call for input on its review of the UK funds regime.
At the 2020 Budget the Government announced that it would carry out a review of the UK funds regime to consider reforms which hold the potential to enhance the UK’s attractiveness as a location for asset management and for funds in particular. Alongside the call for input, the review encompasses two separate work streams, which were also announced at the Budget. First, the Government consulted on the tax treatment of asset holding companies (AHCs) in alternative fund structures. On 15 December 2020, the Government responded to its AHCs consultation and launched a further consultation on AHC proposals. Second, the Government committed to reviewing the VAT treatment of fund management fees, which the Government intends to take forward this year.
The call for input sets out the objectives, scope and next steps for the wider review. The following chapters in the call for input seek comments on possible changes to the UK funds regime, to inform the Government’s overall approach:
- Chapter 2 – the UK’s approach to funds taxation.
- Chapter 3 – the UK’s approach to funds regulation.
- Chapter 4 – opportunities for wider reform.
In chapter 3 of the call for input the Government asks stakeholders a series of questions concerning the UK’s approach to funds regulation including:
- What benefit does fund authorisation bring to product providers beyond access to retail investors?
- Do you have views on the current authorisation processes set out in legislation and how they could be improved?
- How do the FCA’s timescales for fund authorisation compare internationally?
- What would you like the Qualified Investor Scheme structure to enable you to do that is not currently possible?
Chapter 4 of the call for input covers opportunities for wider reform and includes questions such as:
- Do you agree that reforms to enhance the attractiveness of the UK funds regime should focus on appealing to the creation of entirely new funds that have not yet been set up?
- Do you agree that reforms to enhance the attractiveness of the UK funds regime should focus on appealing to alternative investment funds targeting international markets?
- How can the government ensure the UK offers the right expertise for fund administration activity?
The deadline for comments on the call for input is 20 April 2021. The Government will analyse the responses it receives and informed by this exercise will consult on specific proposals for reform.